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Energy Efficiency - should rents be lower in poor EPC homes?

A housing industry group wants the energy efficiency of a social rented property to be factored into the rent the tenant pays. 

The Housing Forum claims that social housing is currently the most energy efficient tenure of housing in England, with 60 per 

But it says the tenants in an EPC D-rated property face bills which may be twice as high as those in an EPC-B rated property, with few options to improve the energy efficiency of their own homes.

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It says these higher energy costs could be factored in to rent levels so that the total cost of rent and bills is evened out for tenants within four years. This would reduce rents for tenants with higher energy bills, with those in more energy efficient properties paying “a bit more rent in recompense” for lower energy bills. 

The forum adds that factoring in energy efficiency into the social rent formula would also provide an incentive for social landlords to upgrade their properties, generating capacity for private finance to help fund some of the upgrades. 

The social housing rent formula was standardised in 2001 and is based on property size and location. 

Not all social housing rents are set according to the formula: some properties, particularly newly built units, can be let out at ‘affordable rent’, defined as up to 80% of market rent. 

However, social rent remains the dominant tenure within social housing, and maximum annual increases for social rents are set by central government and have in recent years tended to allow rents to be increased each year by one more percentage point than the Consumer Price Index - known as ‘CPI plus one’. 

But from 2016 to 2020 rents were instead cut by one percent a year. 

Jamie Ratcliffe - chief communities and sustainability officer at the Sovereign Network Group, a housing association within the forum - says: “The UK has the draughtiest homes in Western Europe. This combined with the highest energy costs exposes the country to authoritarian regimes and undermines our national security. Instead of effectively running the bath with the plug out urgent action to make homes warmer, healthier and easier to heat is needed. 

“At present the complicated formulas for social rents take no account of the cost to heat a home and they should. A “warm rent” would increase the funding options available to landlords and be fairer to tenants.” 

And Ian McDermott - chief executive of Housing Forum member, Peabody - comments: “I’ve been an advocate for “warm rents” for many years and welcome this policy paper from the Housing Forum. It’s a good exploration of the issues. At Peabody we support the principle of taking thermal comfort and energy efficiency into account in the future social rent formula. 

“This could incentivise energy efficiency work and retrofit investment, help reduce residents’ energy bills and support a fairer and more equitable approach to rent setting. We are concerned about additional complexity however, and any changes would need to enshrine affordability in rents and service charges whilst safeguarding landlords’ ability to invest for the long-term. We look forward to being part of the discussion going forward.” 

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  • George Dawes

    Only if owned by the prs , probably will be in minus figures soon

    Think that could never happen .?

    Think again…

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    • 02 May 2024 09:09 AM

    After witnessing the greatest ever transfer of wealth from the middle to the upper classes in the covid years, the agenda is obvious. If you identify as middle class, anything is on the table to take your wealth away. Nothing would surprise me.

     
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    This Housing Forum again! If social housing is so fantastic, why does almost every case of black mould, disrepair etc featured in the national media, involve social housing?🤬

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    It’s the housing equivalent of a Bus 🚌, you use them…. But only when there is no choice 🫣

     
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    In my experience the EPC makes very little difference to the heating costs. My cheapest to heat house doesn't have the best EPC rating. On a cost per person basis the one with EPC E47 wins.

    EPC A93 estimated annual gas bill £851.94 (2 people, 4 bed, detached, built 2004)

    EPC C71 estimated annual gas bill £826.40 (3 people, 3 bed, detached, built 1950)

    EPC E47 estimated annual gas bill £1084.33 (6 people, 6 bed, end terrace,built 1953).

    EPC C71 estimated annual gas bill £1035.37 (5 person, 5 bed, mid terrace, built 1988).

    EPC B88 estimated annual gas bill £886.54 (4 person, 4 bed, mid terrace, built 2004.

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    I'd rather give my tenants a discount of five quid a week for an EPC D rated home than spend ten grand to bring them up to a C.

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    Me too. EPCs are all part of the climate scam.

     
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    I have an F rated house let out below market rent suits me and the tenants, every one happy

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    • 02 May 2024 11:30 AM

    Not everyone is happy Andrew! The council/government/gen rent etc are shocked that you have the audacity to do such a thing. And they are shocked that the tenants have the temerity to rent such a place. This must be rectified forthwith, pointless upgrades and higher rents are necessary, we know best for you and your tenants!

     
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    Go stand in the Naughty Corner. Now Face the Wall too.😁

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    So, after years of bashing land lords, and a 3 year "freeze" on raising the LHA rates, they've starved LL's of vital cash, and still think we're all a bottomless pit of cash, to spend 10k per property, in the hopes of having the gov' NOT find a way of reducing the rent.
    Its all wrong. My house, my rules. If you agree, you can rent it. You know what you're getting into, after all, there's the EPC that differs by whom ever does the survey, and what mood they were in!

    Do you want me going around turning off the lights, and turning the heating down at night for them too? Maybe I should do the washing up whilst I'm at it, to ensure there's not an over-use of washing up liquid. I might as well clean the toilet whilst I'm at it, and just because I'm so kind, I'll offer to make them all a hot coco, and do the ironing too.

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    what I can guarantee is that if I have to spend £ to get an EPC to a higher level the tenant WILL be paying more rent!

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    Exactly me as well

     
  • George Dawes

    They’ll move the goalposts and only new builds sanctioned by the government will be let able , everything else will be rendered worthless

    This way they destroy the working and middle class where property is their main asset

    Mark my words , this is happening now and will conclude c 2030

    George Nostradamus Dawes

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    100% correct.

     
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    George they always move the goalposts, one time there was no VAT on new Build then that changed.
    So say for small VAT registered Company that time if you build an extension for someone for £10k that was the price but after they changed that rule and added the 15% VAT / £1500.00 extra it was a non starter not viable you could have had the foundation in place for that.
    Consequently we couldn’t compete with unregistered Builders they had £1’500.00 head start on you so that was ending that.

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    Personally (and I would never seek to suggest anybody else should do what I am doing) because my flats are D and E rated, I am including unlimited gas, electricity and water in the rent.

    It is possible to get a flat, low rate price for unlimited utilities, so I am taking advantage of that on behalf of my tenants (if I carry on letting).

    I appreciate that that would not satisfy those who are very concerned about climate change and global warming, but it is extremely difficult, if not impossible, to raise the energy efficiency of some Victorian houses. Unless, you want those properties to be unavailable for renting out then you have to focus on what is readily achievable in practical terms to help people best.

    The best solution is frequently the simplest one.

    Furthermore, the advantage of unlimited gas and electricity is not just that the tenants are always warm, but also that there is a much lower likelihood of mould formation.

    Incidentally, my rents are still lower than market even with unlimited utilities included in the price.

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    I know that this is going off the point, but there also needs to be a solution to the housing crisis and the fact that that is going to get worse because of the Renters Reform legislation.

    It seems to be me imperative that there is a fixed term tenancy option permissible. Over the years, we have let the flats hundreds and hundreds of times to people who wanted a fixed term tenancy because they were in London for a fixed term. This could be because they were from overseas/a different part of the UK coming to work in London for a particular period of time or because they were studying in London for a fixed term. We always found out what date people wanted the tenancy to start and what date they were leaving London, and offered the tenancy on that basis.

    There would not be a concern that landlords could coerce people into accepting a fixed term, if they actually wanted an indefinite tenancy, if there were a requirement that evidence of the date that tenants wanted to leave was required before a fixed term tenancy was offered.

    A fixed term option is a better solution than one in which landlords can give students notice to quit at a particular time of the year, because students frequently want to remain at the end of their course unless they are leaving the area. Also, lots of courses do not run to the timetable proposed in the Bill. Why create legislation that results in a poor arrangement for all concerned? Legislation should follow reality, not create problems because it is counter to reality.

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    • 03 May 2024 11:42 AM

    Exactly Ellie. In any other walk of life, if 2 parties want to enter into a contract for something specific, they can do so. But not housing, because some public sector suit knows best for both you and your tenant.

     
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